The NSW Minister for Local Government has told Glen Innes Severn Council he intends to put it under a Performance Improvement Order over its finances, and the council has asked him to wait. The draft order, which the council published in its own business paper, gives seven reasons, starting with the one that underlies the rest: that there are insufficient records and evidence to support an audit opinion over three financial years. The council's answer, lodged on 15 September, does not dispute that the problems are serious. It asks the Minister to decide only after this year's audit is done.

What the draft order says

The Notice of Intention, dated 24 August 2026, came with a draft order under section 438A of the Local Government Act. Its first schedule, headed Reasons for Order, opens: There is evidence that Council has failed to meet its legislative responsibilities in relation to its financial management. The seven reasons that follow include that the council may not be able to pay its debts as they fall due, that its records do not adequately indicate Council's true financial position, and that it has not effectively monitored its liquidity.

The most serious is the third. The draft says there is evidence the council has accessed restricted funds without approval and used those funds for purposes other than for which they were intended in order to fund Council's operating expenses over three financial years, which may constitute a breach of the Local Government Act 1993 and the Environmental Planning and Assessment Act 1979. That is the Minister's draft wording, not a finding by a court or the Audit Office, and the order itself frames it as something that may be a breach.

The draft names the three years in question as 2022-23, 2023-24 and 2024-25, saying the council failed to meet its statutory reporting obligations for each year's financial statements.

What it would make the council do

The order would appoint a temporary adviser, whose name is left blank in the draft, with the requisite financial expertise to advise the council and oversee the financial parts of the order. Its required actions run from reviewing the financial systems and supporting the new one, through a Strategic Performance Improvement Plan, to oversight of the council's administration building project. One action is aimed squarely at the third reason: Maintain an appropriate level of unrestricted cash and expend externally restricted funds only for the purpose of which they are set aside.

Another would put the council's decisions on public record. It would have to keep a register of every resolution with financial implications that has affected its Long Term Financial Plan, which should be made publicly available and updated every 3 months. Compliance reports would fall due at 30, 90 and 150 days from the order.

What the council asked for

At an extraordinary meeting on 10 September, councillors set aside the officers' draft response and adopted an alternative tabled by the Mayor, Cr Margot Davis, and amended in committee. The vote was 6 to 0. The final submission went to the Minister on 15 September and was tabled publicly at the 24 September meeting.

It concedes the ground. The challenges, it says, include three consecutive disclaimed audit opinions, liquidity pressures, deficiencies in financial records and reporting, organisational capability constraints and the consequences of the unsuccessful implementation of Council's former financial management system, and the council accepts that sustained improvement, financial discipline and independent assurance remain necessary.

Its request is about timing: Council's primary request is that the Minister defer making a final determination on the proposed Performance Improvement Order until the Audit Office has completed its audit of Council's 2025-26 financial statements. The argument is that the new finance system went live on 1 July 2026, and that its records should be judged on what that audit finds rather than on the failures of the old system. The submission is also careful about what it cannot yet prove, saying Council does not suggest that commencement of production establishes that implementation has been completed successfully, and that its claims must therefore remain subject to supporting evidence and independent assurance.

The deferral it asks for is short, and it points at the most serious reason. The submission says the 2025-26 audit is expected to be completed on or before the 31st October 2026, and that the Audit Office's interim management letter lists the final audit's key areas of focus, the first being Cash Restrictions: non-compliance with Section 409(3) and 410(3) of the LG Act 1993. Cash restrictions are also the subject of the draft order's third reason. The council also says its administration has reported a positive unrestricted-cash position since December 2025.

It lists what the elected council has already done, including resolving in June 2025 to apply for a permanent special rate variation of 48.3 per cent over three years, which the submission says IPART approved, and adopting a revised Long Term Financial Plan.

Our view

The council's request is reasonable, and for a specific reason: the audit it wants the Minister to wait for is due within weeks, and by the council's own account it is examining exactly the matter the draft order treats most seriously, the use of restricted funds. A decision made before that audit lands would be made on the old system's record. A decision made after it would rest on the first independent test of the new one. Whatever the Minister decides, one action in the draft deserves to survive on its own merits: a public register, updated every three months, of each resolution that moved the long-term financial plan and by how much.

What to watch

The Audit Office's report on the 2025-26 financial statements, which the council expects by 31 October 2026, and in particular what it says about cash restrictions. Then the Minister's decision: to issue the order as drafted, change it, or wait as the council has asked.

Sources

  1. Glen Innes Severn Council, Council to consider response to proposed Performance Improvement Order (media release, 7 September 2026, read 2 October 2026): the extraordinary meeting and the Notice of Intention.
  2. Glen Innes Severn Council, Annexures, Extraordinary Meeting, 10 September 2026 (PDF, 26 pages, read 2 October 2026): the Notice of Intention dated 24 August 2026 and the draft Performance Improvement Order, its reasons, required actions, the temporary adviser, the financial-resolutions register and the compliance-report periods.
  3. Glen Innes Severn Council, Minutes, Extraordinary Meeting, 10 September 2026 (PDF, read 2 October 2026): the resolution adopting the Mayor's alternative response, its terms, and the 6 to 0 division.
  4. Glen Innes Severn Council, Business paper, Ordinary Meeting, 24 September 2026 (PDF, read 2 October 2026), item 7.15: that the submission was lodged on 15 September 2026.
  5. Glen Innes Severn Council, Annexures, Ordinary Meeting, 24 September 2026 (PDF, 383 pages, read 2 October 2026), item 7.15 Annexure A: the council's submission to the Minister, including its acknowledgements, its request to defer, the expected audit date and focus areas, the unrestricted-cash statement and the special rate variation.

How we did this

Every quoted passage is from the council's own published papers, which include the Minister's Notice of Intention and draft order. The Notice's covering letter is published as a scanned image, so we quote the draft order rather than the letter. The reasons in the draft order are the Minister's stated grounds at the draft stage, not findings by a court or the Audit Office. We have not seen the confidential annexures the council omitted from the public copy. We did not contact the council or the Office of Local Government for this piece. The “our view” paragraph is opinion based on the documents quoted.